The debt settlement industry is largely unregulated and consumers face plenty of perils because of that. Nevertheless, the industry has managed to find a niche among frustrated and overwhelmed borrowers who try to avoid bankruptcy at any cost. Well, maybe not at any cost, since a too expensive debt settlement program can further hurt one’s budget. Anyway, there are plenty of companies today that provide this type of services and resorting to their expertise is a necessary step, as negotiating with creditors is not something that just anyone can do and not many creditors are willing to negotiate with individuals. However, before jumping ahead and choosing a debt settlement company, it is important to understand the implications of such a program, as well as its ins and outs. Here is a short guide to debt settlement and when it makes sense to resort to such services.
First of all, many resources on the topic will tell you that debt settlement is not your only option. While that is true, when you get to the point where debt consolidation loans are merely a ticket to bankruptcy, then settling your debt is the best way to go. It is important to act fast and this is the first thing you should know about the issue. Being proactive gets you a long way and you should contact a debt settlement company as soon as you see signs of concerns, such as being 6 months behind on your payments. You also need to be aware of the consequences debt settlement could have, the most important of which is the fact that any forgiveness of debt higher than $600 is taxable. However, all these issues and aftermaths will be presented and explained to you by the debt settlement company, provided that you find an experienced and highly reliable one. Since there is a large niche of troubled consumers, there are also numerous debt consolidation companies and it would be a wise idea to check out some reviews and do a little research on this matter as well.
Another thing you should know about debt settlement is that creditors will always try to confuse you and pressure you into paying the full debt. Although they are legally required to report any settlement to the credit bureau, some creditors fail to do so and you might end up with a credit report that shows a full balance still being owed, although you negotiated a settlement. This is another reason for which you shouldn’t negotiate with creditors yourself and resort to the services of a debt settlement company that knows how to handle these things and follows through to make sure your account is in good balance. The bottom line is that, if you reach the conclusion that debt settlement is the best solution for you, then you need to research the topic carefully, find out what exactly it entails and choose a company that you can trust to settle your debt favorably, without costing you too much.